The PRA has welcomed a climbdown from the government accepting that retailers did not profit from the 5ppl cut in duty in the March Budget this year.
In May the then business secretary Kwasi Kwarteng wrote to the heads of the PRA, UKPIA, the Downstream Fuel Association, which mainly represents supermarkets, and the UK & Ireland Fuel Distributors Association, claiming the cut had not been passed on to consumers.
He noted the rising prices of fuel and said: “The British people are rightly frustrated that the chancellor’s fuel duty cut does not appear to have been passed through to forecourt prices in any visible or meaningful way.”
The climbdown came in the government’s response to the Competition and Markets Authority (CMA) Road fuel Review published in July which found there was “no evidence… that retailers in aggregate have profited from failing to pass on the fuel duty cut.”
In its response the government agreed that “there is no evidence, nor is it clear from analysis that retailers in aggregate have profited from failing to pass on the 5p fuel duty cut.”
PRA executive director Gordon Balmer said: “We are pleased that the government has acknowledged that petrol retailers did not profit from 5ppl fuel duty cut.
“Independent forecourts have worked extremely hard to keep their communities fuelled and fed, and it is gratifying to be exonerated from the accusations previously made against our members.”
The government also gave a positive response to suggestions by the CMA that price comparison tools might provide greater transparency for consumers and allow them to compare the price of fuel at their local petrol stations.
The CMA pointed to international examples, such as Germany’s Market Transparency Unit for Fuels, which enables consumer access to current fuel prices through third party apps and websites.
In its response the government said: “We agree that an open data scheme could have the potential to increase transparency around fuel prices and be a pro-consumer measure, and we will commit to swift further work and analysis to assess the feasibility of this recommendation, including timescales for implementation and legislative vehicles, and whether any such scheme would be likely to have a notable impact on fuel price transparency.”
However, it was more cautious about proposals to tackle high fuel prices at motorway service stations with signage. It stated: “While we acknowledge that provision of more information to motorway users about fuel prices could, in principle, be a tool to increase fuel price transparency, further work and analysis is needed to assess the merits of this recommendation and whether this would be likely to have a notable impact on fuel price transparency. Consideration will need to be given to a variety of factors including traffic, road safety, environmental, cost and legislative options.”
It concluded: “We will continue to work with the CMA and other relevant stakeholders to explore its recommendations in more detail, and will aim to conclude our assessment in Spring 2023 or earlier if possible, to align with the publication of their market study.
The RAC welcomed discussion of price comparison measures. Its fuel spokesperson Simon Williams said: “It’s encouraging the government is talking about an ‘open data scheme’, particularly if it makes it easy for drivers to compare local fuel prices so they can always find the best places to fill up.
“Hopefully, this would also lead to more custom for the lowest priced retailers and incentivise others to price more competitively. There is, of course, the danger that retailers will just ‘price match’ one another at levels that still don’t fairly reflect wholesale prices.
“Having provided evidence to the CMA for its more detailed market study we hope it will be able to shed some light on why the biggest fuel retailers have significantly upped their margins during an extended period of lower wholesale costs instead of passing on lower prices to drivers at their pumps in the cost-of-living crisis. This has led to an unusual situation where many smaller forecourts have been charging far less than their bigger rivals. As supermarkets normally price their fuel 4ppl lower than the UK average drivers who continue to fill up at their forecourts without shopping around may have lost out significantly.
“As well as knowing where they can buy the cheapest fuel drivers need some indication of whether retailers are charging a fair price in the first place.”
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